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Wednesday, February 10, 2010

So would ACT bring down the government?

With the Nats now backing away from previous statements that a rise in GST is "not on the agenda" and is "not our policy", it appears the two parties the Nats need to govern need to make clear what their policies are.

National ally the Maori Party is nervous, however. MP Rahui Katene said the party was retaining the option of walking away from its confidence and supply agreement with National over a GST rise.

Good for the Maori Party. It knows only too well that a rise in GST will hit everyone, not just those who might get an income tax cut. Being seen to support an increase in the price of everything to offset tax cuts that may be seen to be for those on higher incomes could cost the Maori Party dearly.

"The new fiscal programme had only been made possible because of ACT, he said, and he would therefore like to thank all ACT's supporters, his fellow MPs and the members of other caucuses with whom ACT had worked so tirelessly to bring about much-needed reform."

Roger Douglas has rightly said "The spending cuts must come first. Once we have cut spending, then we can cut taxes. If we want to make the tax system more efficient, we need constitutional restraints against excessive levels of Government expenditure. It is only when we have stopped the Government from exploiting the taxpayer that we can aim for efficiency"

So it's view is clear then...?!?!

ACT either makes it clear it votes against this, and tells the Nats a flat no, or the government is brought down.

Or ACT votes for it, and risks splitting asunder.

The test is simple - is ACT a party that people voted for so that government could cut one tax but increase another?

It may be troublesome to report and oh so boring (and therefore not worth blogging) but the speech Hide gave was in the context of a formal confidence motion moved by the PM.

Here is the start of Hide’s speech

“New Zealand is now enjoying stable centre right government. That’s something we haven’t had since the start of MMP.

We can put that down to the success of National and success the of the ACT Party. ACT has delivered on its promise. ACT has kept its word.

New Zealand has centre-right government because of ACT.

For that I would like to thank all ACT members, ACT supporters and ACT voters. They made centre right government possible for New Zealand.

I would like to thank Prime Minister John Key, Finance Minister Bill English and National Ministers for their leadership in government through challenging times. We have worked closely together. We have built up a deep and mutual respect and trust.

I would also like to thank the Maori Party. We have developed a deep respect for the Maori Party over many years. We have our differences but we talk about them openly and with respect for one another.

ACT promised stable centre right government. And we have delivered. But we made solemn policy promises too….”

Supporting a John Key led minority National Government was the meta narrative of ACT’s campaign generally and its pitch to Epsom voters specifically over two elections.

Hide isn’t being odd or egotistical to point out that of the two support parties guaranteeing confidence and supply (whose votes are required for a Parliamentary majority), ACT is the more reliable and is really required to be so because of the electoral commitments it made and because it’s the right thing to do.

Not to mention signing a confidence and supply agreement to that effect, which I would assume as a Libertarian you support people keeping undertakings freely entered into.

I don’t really want to give you a public law 101 but confidence motions are all about stable Government … or the absence of it. In this context, Hide’s speech is formally correct and unremarkable and certainly not egotistical or odd as Ms Clifton implies. He is simply reiterating the ongoing obligation of commitments already made.

The other public law thing to note is that budget matters are confidence and supply issues.

Sir Roger isn’t saying that ACT should breech its confidence and supply agreement what he is saying is that within the context of ACT guaranteeing confidence and supply, ACT wants progress on dumping wasteful spending and restraining the ability of the State to continue to take more and more revenue.

What that means in real world terms is pushing hard using the 3.65% of influence one has but short of withdrawing support for confidence and supply.

The Nats are a "centre right" government?That's playing right into the hands of the left's successful drive to frame the terms of the debate.Key and this lot are about as "centre right" as Klark's mob were--that is, not at all.

You have a usual notion of what guaranteeing National confidence and supply means.

Confidence matters are

- Budget matters- Confidence motions- Any other matter the PM declares under Standing Orders as a confidence issue.

Supply is of course the appropriations.

Alas the budget IS classically a confidence matter whether one likes it or not – the Nats have no option on this.

That said, their interest is to present a budget that commands a majority in Parliament.

If you are in a confidence and supply arrangement then you either vote for the budget or you breach confidence and supply. This might result in the PM advising the GG to prorogue Parliament and therefore result in an early election.

Are you seriously suggesting the ACT behave in a manner that causes an early election because the Nats propose raising GST with compensatory personal tax cuts and I assume, benefit increases?

You think that makes a good pitch to voters? You think they would reward a Parliament that cannot sort this out short of having another election?

ACT has never said it would never vote for an increase in GST. Indeed, Sir Roger the architect of GST has done that himself.

What Sir Roger is saying is that the ideal in public policy is that spending cuts should precede tax cuts. The big problem is that the State is taking and consuming too much however efficient and balance the tax system is. Any efficiency, broadening or balancing of the tax system will just result in the State consuming more unless spending is reduced. Of course he is right.

But in a mature world one doesn’t without confidence and supply because the bigger Party wont do the ideal thing. One uses the 3.65% of power one has, along with the power of ideas and persuasion.

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About Me

Life, liberty and the pursuit of happiness. Politics, philosophy and economics from a pro-capitalist, libertarian, objectivist perspective. Born in New Zealand, live in the UK, career has been in transport, telecommunications and infrastructure policy.